PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: GRAND JURY SUBPOENA

UNDER SEAL; UNDER SEAL 2,

Petitioners-Appellees, No. 98-4841

v.

UNITED STATES OF AMERICA,

Respondent-Appellant.

Appeal from the United States District Court

for the Western District of North Carolina, at Charlotte.

Graham C. Mullen, Chief District Judge.

(MISC-98-92-MU)

Argued: March 3, 1999

Decided: April 29, 1999

Before ERVIN, HAMILTON, and LUTTIG, Circuit Judges.

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Affirmed by published opinion. Judge Luttig wrote the opinion, in

which Judge Ervin and Judge Hamilton joined.

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COUNSEL

ARGUED: David S. Kris, UNITED STATES DEPARTMENT OF

JUSTICE, Washington, D.C., for Appellant. Thomas Louis Patten,

LATHAM & WATKINS, Washington, D.C.; E. Fitzgerald Parnell,

III, POYNER & SPRUILL, L.L.P., Charlotte, North Carolina, for
Appellees. ON BRIEF: Faith S. Hochberg, United States Attorney,

Mark R. Winston, Assistant United States Attorney, Mark T. Calloway, United States Attorney, Frank D. Whitney, Assistant United

States Attorney, Brian L. Whisler, Assistant United States Attorney,

UNITED STATES DEPARTMENT OF JUSTICE, Washington,

D.C., for Appellant. Jennifer C. Archie, LATHAM & WATKINS,

Washington, D.C., for Appellees.

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OPINION

LUTTIG, Circuit Judge:

The United States appeals a decision by the federal district court

to quash a subpoena in an ongoing criminal investigation on the

ground that the sole purpose of the subpoena was to obtain discovery

for a parallel civil qui tam proceeding. Because the district court's

findings as to the purpose of the subpoena were not clearly erroneous,

we affirm.

I.

This case involves allegations of potentially fraudulent pricing

practices by Baker & Taylor, Incorporated (B&T), the nation's largest

wholesale bookseller. On June 1, 1995, two private parties -- Ronald

Thornburg, a former employee of B&T, and Robert Costa, a public

librarian in Richmond, Virginia1-- filed a sealed qui tam civil complaint in the United States District Court for the Northern District of

California against B&T and its former corporate parent, W.R. Grace

& Company - Connecticut ("Grace"), alleging that B&T fraudulently

overcharged institutional customers, including federally funded

libraries, in violation of the civil provisions of the False Claims Act.

See United States ex rel. Costa v. Baker & Taylor, Inc., 955 F. Supp.

1188, 1189 (N.D. Cal. 1997). From the date of filing until January

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1 Thornburg has since been dismissed from the case, leaving only Costa

as relator in the qui tam action. SeeUnited States ex rel. Costa v. Baker

& Taylor, Inc., No. C-95-1825-VRW, 1998 WL 230979, at *4 (N.D. Cal.

March 20, 1998).

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1997, the government conducted an investigation under seal to determine whether or not to intervene in the action, during which the government amassed thousands of documents and interviewed numerous

witnesses. The investigation was spearheaded by Dee Lord, a lawyer

in the Commercial Litigation Branch of the Civil Division of the

Department of Justice, and Marty McGuire, a special agent in the

Defense Criminal Investigative Service (DCIS), a branch of the

Office of the Inspector General at the Department of Defense. In January 1997, after the district court decided to lift the seal on the complaint, the government formally intervened in the case.

On February 8, 1996, the Department of Justice asked DCIS to

commence a criminal investigation against B&T to determine whether

B&T's allegedly fraudulent pricing practices violated any federal

criminal statutes. Between May 1996 and August 1998, officials

working on the civil case intermittently met with their counterparts on

the criminal case. Notably, McGuire participated in the criminal

investigation, as well as the civil investigation. During this period,

however, little progress was made on the criminal case, and indeed

the statute of limitations appears to have run on a number of potential

criminal charges. In early 1998, Mark Winston, Assistant United

States Attorney for the District of New Jersey, took over as the prosecutor responsible for the criminal case. He was assisted by Frank

Whitney, Assistant United States Attorney for the Western District of

North Carolina.2

In July 1998, the government issued a subpoena in the civil case

against Gerald Garbacz, president of B&T. Attached to the subpoena

was a request for a list of records relating to B&T's billing practices,

designated as "Attachment A." On July 31, 1998, B&T and Grace

objected to this subpoena and requested that discovery be stayed. The

district court scheduled a telephone hearing for August 6, 1998, in

order to rule on the objection.

Events in the civil and criminal cases came to a head on August 6.

On the morning of August 6, members of the civil and criminal teams,

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2 The criminal investigation proceeded simultaneously in New Jersey

and North Carolina because B&T maintained corporate offices in both

locations.

 3
including Lord, McGuire, and Winston, met in Washington to

exchange information and discuss how to proceed in the criminal case.3

That afternoon, during the scheduled telephone conference in the civil

case -- in which Lord participated -- the district court granted B&T

and Grace's request to stay discovery in that case, pending the resolution of various motions by states to intervene as plaintiffs.4

With discovery in the civil case stayed, members of the criminal

team, including Whitney and McGuire, met on August 26 and decided

to begin using a grand jury to assist in the criminal investigation. On

September 11, Whitney directed McGuire to prepare a criminal subpoena for Thomas Neblett, a B&T salesman with responsibility for

sales to schools and libraries. In preparing the subpoena, McGuire

attached a photocopy of Attachment A, the same list of documents

that he had attached to the Garbacz subpoena in the civil case. The

subpoena was issued on September 16 and duly served. No other

criminal subpoenas were served.

Upon learning about the Neblett subpoena, counsel for Grace contacted Lord on October 7 and informed her of Grace's intention to

seek sanctions against the government for its allegedly improper use

of a criminal subpoena to obtain discovery for a civil case. On October 8, the day after she learned that Grace knew about the subpoena,

Lord wrote to McGuire recommending that he be "walled off" from

any further involvement in the civil proceedings. On October 19,

B&T and Grace filed motions in the United States District Court for

the Western District of North Carolina to intervene in the criminal

grand jury proceedings and to quash the Neblett subpoena. The district court granted both motions, but permitted the government to

reapply for the subpoena once the stay in the civil proceeding was

lifted.

The government then moved to unseal the pleadings in the criminal

case in order to allow officials from the civil team to review the allegations of misconduct against them. After the district court granted

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3 Whitney participated in the meeting by telephone.

4 The district court has yet to rule on the motions to intervene, and the

stay therefore remains in force.

 4
the motion, the government then moved for reconsideration of the district court's order quashing the subpoena, attaching affidavits from

Lord, McGuire, Winston, and Whitney, in which they testified that

members of the civil team did not know about, and were not involved

in, the decision to issue the subpoena. The district court denied the

motion. From the district court's original order quashing the subpoena

and its subsequent order denying the motion for reconsideration, the

government now appeals.

II.

As a preliminary matter, we must dispose of appellee's motion to

dismiss for lack of subject matter jurisdiction. Although we have frequently reviewed district court orders quashing subpoenas, see, e.g.,

In re Grand Jury Proceedings No. 92-4, 42 F.3d 876, 877 (4th Cir.

1994); United States v. Under Seal, 757 F.2d 600, 602 (4th Cir.

1985); United States v. Under Seal, 745 F.2d 834, 835 (4th Cir.

1984), vacated on other grounds sub nom. United States v. Doe, 471

U.S. 1001 (1985); United States v. Under Seal, 714 F.2d 347, 348

(4th Cir. 1983), we have never discussed the source of our jurisdiction

to do so, except in the 1984 Under Seal case, and then only in a onesentence footnote. There, we stated simply that"[o]ur jurisdiction is

based on 18 U.S.C. § 3731," without further elaboration. Under Seal,

745 F.2d at 835 n.1.

Appellant contends that jurisdiction lies on two independent

grounds: 18 U.S.C. § 3731, which provides jurisdiction for appeals by

the United States from district court orders suppressing or excluding

evidence in criminal proceedings, and 28 U.S.C.§ 1291, which provides jurisdiction generally for appeals from final district court decisions.

We begin with 18 U.S.C. § 3731. In relevant part, the statute reads:

An appeal by the United States shall lie to a court of appeals

from a decision or order of a district court suppressing or

excluding evidence or requiring the return of seized property

in a criminal proceeding, not made after the defendant has

been put in jeopardy and before the verdict or finding on an

indictment or information, if the United States attorney cer-

 5
tifies to the district court that the appeal is not taken for the

purpose of delay and that the evidence is a substantial proof

of a fact material in the proceeding.

18 U.S.C. § 3731.5 In candor, given the text of section 3731, we are

less than convinced that this provision was actually intended to afford

appellate jurisdiction to review an order quashing a grand jury subpoena. First, the phrase "a decision or order of a district court suppressing or excluding evidence," is most naturally (even if not

exclusively) understood as an order in either a post-indictment, pretrial proceeding or the trial itself; that is, we do not often refer to the

"suppression" or "exclusion" of evidence from a grand jury -- indeed,

we do not even often have the occasion to do so. Second, the provision seems to presuppose (even if not necessarily so) a postindictment decision, through its limitation to orders entered prior to

the time that "the defendant" has been put in jeopardy, because, of

course, only as to post-indictment orders is there a"defendant."

Finally, that the United States Attorney must certify both "that the

appeal is not taken for the purpose of delay" and"that the evidence

is a substantial proof of a fact material in the proceeding" further

tends to confirm that the statute was intended to afford an appeal right

only from trial-related and actual trial orders, because these are

requirements that seem to have little or no relevance in the context of

a grand jury proceeding.

However, while we harbor doubts as to whether Congress intended

section 3731 to extend to appeals from orders quashing grand jury

proceedings, there is no question that, even though it was conclusory,

our footnote statement in Under Seal that section 3731 provided jurisdiction to review the order quashing the subpoena in that case consti-

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5 Appellant alternatively contends that jurisdiction lies under a different

provision of 18 U.S.C. § 3731, which grants jurisdiction over any appeal

from a district court order "dismissing an indictment or information,"

without any certification requirement. Appellant contends that the district

court's order quashing the subpoena would effectively render it impossible to obtain an indictment against B&T. Even assuming that this is the

case, we do not believe that this provision of section 3731 can be read

to extend to cases in which the mere effect of a district court order is to

render it impossible to obtain an indictment.

 6
tuted a holding of the court. Moreover, albeit also without an

extended discussion of the statutory text, our sister circuits that have

considered the issue have come to the same conclusion concerning the

reach of section 3731. See, e.g., In re Grand Jury Subpoena Duces

Tecum, 112 F.3d 910, 914 (8th Cir.), cert . denied sub nom. Office of

President v. Office of Independent Counsel , 521 U.S. 1105 (1997); In

re Kiefaber, 774 F.2d 969, 972-73 (9th Cir. 1985), vacated on other

grounds, 823 F.2d 383 (9th Cir. 1987); In the Matter of Grand Jury

Empanelled February 14, 1978, 597 F.2d 851, 854-55 (3d Cir. 1979).

Therefore, bound by our decision in Under Seal , we conclude that

jurisdiction does lie under section 3731 to review the district court's

order in this case.6

Notwithstanding the textual uncertainties in extending section 3731

to appeals from orders quashing subpoenas in grand jury proceedings,

appellee does not really dispute that jurisdiction to review such orders

ordinarily lies under section 3731. Instead, appellee makes the more

circumscribed argument that jurisdiction should not lie in this particular case because appellant failed to obtain a timely certification from

the district court. Appellee appears to contend that appellant should

have filed its request for certification at least within the 30-day period

specified for filing a notice of appeal, if not before filing the actual

notice of appeal itself. The certification requirement in section 3731,

however, is discretionary, not jurisdictional. See, e.g., United States

v. Salisbury, 158 F.3d 1204, 1206 (11th Cir. 1998); United States v.

Bailey, 136 F.3d 1160, 1163 (7th Cir. 1998); United States v. Smith,

135 F.3d 963, 967-68 (5th Cir. 1998); United States v. Shareef, 100

F.3d 1491, 1499 n.2 (10th Cir. 1996); United States v. Becker, 929

F.2d 442, 444-45 (9th Cir. 1991). And, in weighing the equities in this

case, we find it dispositive that appellee suffered no prejudice from

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6 Appellee argues that, even if jurisdiction is generally appropriate

under section 3731, jurisdiction is inappropriate in this case because the

district court's order quashing the subpoena was effectively only "temporary," leaving open the possibility that appellant could seek the subpoena

again after the stay in discovery in the civil case was lifted. Whether or

not the district court's order was effectively "temporary," however, is not

relevant to the question whether the district court's order -- however

"temporary" -- is an "order . . . suppressing or excluding evidence . . .

in a criminal proceeding" for purposes of 18 U.S.C. § 3731.

 7
any delay by appellant in obtaining a timely certification. To the contrary, appellant filed its request for certification only two weeks after

the period for filing a notice of appeal had elapsed, and appellant in

fact had already moved for an expedited appeal. Consequently, we

agree with appellant that our exercise of jurisdiction under section

3731 is appropriate despite appellant's failure to obtain a timely certification, and therefore deny appellee's motion to dismiss.7

III.

Turning to the merits of the dispute, we begin by reviewing the district court's finding that appellant sought the subpoena in the criminal

proceeding for the purpose of obtaining discovery for the civil proceeding. As both parties agree, a government prosecutor is barred,

absent judicial approval, from sharing grand jury material with government civil attorneys. See Fed. R. Crim. P. 6(e)(2); United States

v. Sells Eng'g, Inc., 463 U.S. 418, 435 (1983). As both parties also

agree, we review the district court's finding regarding appellant's purpose in seeking the subpoena for clear error. See, e.g., United States

v. Moss, 756 F.2d 329, 332 (4th Cir. 1985); see generally United

States v. United States Gypsum Co., 333 U.S. 364, 395 (1948) (elaborating on clear error standard).

The district court based its finding that appellant was engaging in

a "thinly-veiled effort to circumvent" the civil discovery stay on

essentially three grounds. J.A. at 280. First, the district court reasoned

that it was more than "merely a coincidence" that the civil and criminal attorneys conferred on the same day as the judge in the civil case

was scheduled to consider the civil discovery stay issue and actually

did stay discovery, thus raising the inference that, during the conference, the attorneys agreed to circumvent any stay in the civil case by

means of a grand jury investigation in the criminal case. Id. Second,

the district court concluded that McGuire, the DCIS investigator, had

not been "walled off" from the civil case. Id. Third, the district court

reasoned that it was again more than "merely a coincidence" that the

records sought in the criminal subpoena -- as listed in Attachment A

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7 Because we conclude that jurisdiction lies under 18 U.S.C. § 3731, we

need not reach the issue of whether jurisdiction alternatively lies under

28 U.S.C. § 1291.

 8
-- were identical to those sought in the earlier civil subpoena, again

raising the inference that the purpose of the criminal subpoena was to

obtain evidence for the civil case. See id.

Although appellant challenges each of these grounds for the district

court's finding, we conclude that these grounds, even if insufficient

to do so individually, provide sufficient support for the district court's

finding when taken as a whole to render the finding not clearly erroneous. Regarding the district court's conclusion concerning the timing

of the conference between the civil and criminal attorneys, appellant

contends that the civil and criminal attorneys could not possibly have

agreed to circumvent the civil discovery stay during the course of

their conference because the conference occurred earlier in the day

than the conference in which the discovery stay was issued. This

argument fails, however, because the mere fact that the conference of

the civil and criminal attorneys occurred first is not necessarily dispositive: although the attorneys did not know for certain that discovery

would be stayed at the time of their conference, they knew that a

motion to stay discovery would be discussed in the subsequent conference, and therefore knew that there was a possibility that a stay

would issue later that day. Appellant further contends that the conference between the civil and criminal attorneys was scheduled before

the conference in which the civil discovery stay was issued was

scheduled. This argument, however, is not necessarily dispositive

either: although the fact that the morning conference was scheduled

first would suggest that, at the time it was scheduled, there may have

been no intention to discuss the effects of a potential civil discovery

stay during that conference, it does not negate the possibility that, the

afternoon conference having been scheduled, the civil and criminal

attorneys did discuss the effects of a potential civil discovery stay in

the course of the morning conference. The district court's inference

that the civil and criminal attorneys agreed to circumvent a potential

stay in the civil proceeding during their conference was therefore not

implausible, even if it was not compelled.

Regarding the district court's conclusion concerning the "walling

off" of McGuire, appellant points to Lord's letter to McGuire of October 8, 1998, which it says unequivocally indicates that McGuire had

in fact been "walled off." We reject this argument, however, for the

simple reason that, by October 8, 1998, it was too late for McGuire

 9
to be walled off because the subpoena had already issued. The government introduced no evidence to suggest that McGuire was walled

off before the subpoena had issued. Indeed, it appears that, as early

as May 1996, an Assistant United States Attorney assigned to the

criminal case, Alain Leibman, requested that McGuire be walled off,

but that this request was never acted upon. See J.A. at 197. Because

it was reasonable for the district court not to credit Lord's post hoc

letter to McGuire as evidence that McGuire had previously been

walled off from involvement in the civil investigation, it was also reasonable for the district court to conclude that McGuire had not properly been walled off.

Finally, regarding the district court's conclusion concerning the

identity of the records sought in the criminal subpoena and those

sought in an earlier civil subpoena, appellant contends that this identity was not surprising because the civil and criminal investigations

involved the same underlying conduct. This contention, however, is

somewhat, if not entirely, inaccurate. Because the statute of limitations had apparently run on a number of the potential criminal

charges, the criminal investigation was focused solely on whether

B&T's conduct violated the Major Fraud Act, 18 U.S.C. § 1031,

which prohibits fraud involving federal contracts valued in excess of

$1 million.8 The civil investigation, by contrast, focused more generally on whether B&T had fraudulently overcharged institutional customers, including federally funded libraries. Attachment A requested

documents regarding B&T's sales practices not just with respect to

government customers -- which would have fallen within the scope

of the criminal investigation -- but also with respect to school and

library customers -- which could only have been relevant to the civil

investigation. See J.A. at 72 (Attachment A). In view of the fact that

appellant used the same attachment in the criminal subpoena despite

the fact that some of the documents being sought were evidently relevant only to the civil investigation, the district court was not unreasonable in concluding that appellant used an identical attachment for

the purpose of circumventing the civil discovery stay.

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8 The Major Fraud Act, unlike various other criminal statutes, has a

seven-year, rather than a five-year, statute of limitations. See 18 U.S.C.

§ 1031(f).

 10
Taking these three grounds for the district court's finding -- at

least in the aggregate -- we cannot conclude that the district court's

finding that appellant sought the subpoena in the criminal proceeding

for the purpose of obtaining discovery for the civil proceeding was

clearly erroneous.

In addition to contending that the district court erred in its original

order quashing the subpoena, appellant alternatively contends that the

district court erred in denying appellant's motion for reconsideration,

which was submitted together with affidavits in which various members of the civil and criminal teams testified that members of the civil

team did not participate in the decision to issue the subpoena.9 Having

reviewed the affidavits, however, we conclude that the district court

did not clearly err by effectively discounting the affidavits in its order

denying the motion for reconsideration, in light of the evidence discussed in its original order. Accordingly, because we conclude that

the district court did not clearly err by leaving its initial finding undisturbed even after taking into account the evidence introduced together

with the motion for reconsideration, we affirm the district court's

order denying the motion for reconsideration.

IV.

Appellant alternatively contends that, even if the subpoena in the

criminal proceeding was being sought for the purpose of obtaining

discovery for the civil proceeding, the district court should not have

quashed the subpoena because the subpoena was also being used for

the legitimate purpose of obtaining information relevant to the criminal proceeding. We disagree.

A district court retains the power to quash a subpoena whenever

"compliance [with the subpoena] would be unreasonable or oppres-

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9 For purposes of this discussion, we assume that the district court did

not consider the affidavits in its original written order quashing the subpoena, despite the fact that the motion for reconsideration appears to

have been filed just before the written order actually issued. To the

extent that it did consider the affidavits, however, our ultimate conclusion that the district court did not clearly err by refusing to credit the affidavits is unaffected.

 11
sive." Fed. R. Crim. P. 17(c). A subpoena will ordinarily issue whenever there is a "reasonable possibility that the category of materials

the Government seeks will produce information relevant to the general subject of the grand jury's investigation." United States v. R.

Enters., Inc., 498 U.S. 292, 301 (1991). When such a showing of relevance can be made, a subpoena will issue even if the subpoena is also

being sought for another, illegitimate purpose. 10 See Under Seal, 714

F.2d at 350 ("Once it is shown that a subpoena might aid the grand

jury in its investigation, it is generally recognized that the subpoena

should issue even though there is also a possibility that the prosecutor

will use it for some purpose other than obtaining evidence for the

grand jury.").11 A subpoena should therefore only be quashed when

the illegitimate purpose is the "sole or dominant purpose of seeking

the evidence." Id.12

In this case, the district court found only that the government was

"attempting . . . to use the criminal process of the grand jury subpoena

to obtain documents for use in the California civil action"; the court

made no finding that the Neblett subpoena would produce information relevant to what, in fact, it described as a"moribund" criminal

investigation. J.A. at 280. Based on the record before us, we cannot

conclude that the district court's essential finding that the government

sought the criminal subpoena solely for the purpose of obtaining evidence for the civil proceeding was clearly erroneous. As noted above,

many of the documents sought in Attachment A related to B&T's

sales to school and library customers, which could only have been rel-

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10 In a case in which relevant information was being sought, but in

which that information was nevertheless subsequently provided to civil

attorneys, the proper redress would be sanctions for contempt. See Fed.

R. Crim. P. 6(e)(2).

11 In Under Seal, we noted that a prosecutor's affidavit that a subpoena

was being sought for the purpose of obtaining relevant information could

suffice to establish relevance. See Under Seal , 714 F.2d at 350. The district court in this case, however, chose not to credit the affidavits that

were offered into evidence, see supra at 11, and we do not think that its

decision was erroneous.

12 Appellant's assertion that"there is no `sole or dominant purpose' test

in this Court's cases," see Reply Br. of Appellant at 8, is therefore evidently incorrect.

 12
evant to the civil investigation. See supra at 10. In addition, the criminal investigation already had most, if not all, of the documents sought

in Attachment A, rendering any further attempts to obtain those documents by means of the subpoena largely, if not entirely, superfluous.

J.A. at 263.

Appellant contends that, even if the district court correctly quashed

Attachment A of the subpoena, it should nevertheless have allowed

to stand the portion of the subpoena compelling Neblett himself to

testify. We see no evidence in the record, however, to suggest that the

district court clearly erred by failing to find that Neblett himself

would provide evidence relevant to the criminal investigation, even if

Attachment A would not. As counsel for appellant conceded at oral

argument, Neblett was not involved in any way with sales by B&T

pursuant to federal contracts, much less federal contracts large enough

to fall within the scope of the Major Fraud Act, and instead was

responsible only for sales to schools and libraries, including sales to

the Richmond, Virginia, library -- the same library at which the relator in the civil case was formerly employed.

In the absence of sufficient evidence to the contrary, we conclude

that the district court did not commit clear error in finding that the

government sought the Neblett subpoena solely for the purpose of

obtaining discovery for the civil proceeding. We therefore uphold the

district court's decision to quash the subpoena without prejudice to

the United States to return to the court with a renewed subpoena once

the discovery stay in the civil qui tam action is lifted.

The judgment of the district court is affirmed.

AFFIRMED

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